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Remittances and the Redistributive Policy in Ghana: A Computable General Equilibrium Approach

Author

Listed:
  • Isaac Dadson

    (Ghana Statistical Service, Economic Statistics Division, GHANA)

  • Ryuta Ray Kato

    (Graduate School of International Relations, International University of Japan)

Abstract

This paper numerically explores the distributive policy for improving both welfare and income inequality with increased remittances in Ghana within a computable general equilibrium (CGE) framework. Our simulation results show that the government can improve both welfare and inequality by using a government surplus generated by increased remittances without any additional revenue resources. If the government is concerned about inequality, then the surplus for more direct transfers to the rural household results in the best outcome. On the other hand, if the government is concerned only about welfare, then a policy to use the surplus for more government spending on education or health achieves the largest welfare gain through its direct demand effect. While the Ghanaian economy can enjoy the largest welfare gain as a whole when the surplus is used for more government spending on education or health, the increased welfare gain will be more distributed to the government sector in comparison with the case when the surplus is used for more direct transfers to the rural household.

Suggested Citation

  • Isaac Dadson & Ryuta Ray Kato, 2016. "Remittances and the Redistributive Policy in Ghana: A Computable General Equilibrium Approach," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 28-44, May.
    • Handle: RePEc:bap:journl:160203
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    References listed on IDEAS

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    More about this item

    Keywords

    Ghana; Remittance; Welfare; Income inequality; Computable General Equilibrium (CGE) Model; Simulation;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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